Category: Commerce Notes PPT

Risk management is a process through which an organisation identifies, assesses and controls threats, if any, to its earnings and capitals. The source of threats could be due to a variety of causes like uncertainties in finances, legal liabilities, errors in strategy by the management, accident or a natural disaster. For digitised organisations, protection of data and threats to their IT security are of major concern.

Thus they have adopted risk management plans so that they can combat the threats against their important information and identify them to take strict actions. The importance of international business is huge for global organisations and they cannot take the risk of unexpected events causing major mayhem to their earnings. Risk management helps in this regard and helps them prepare for unexpected events with fewer software risks and extra costs.

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Strategies of Risk Management and its Processes

One of the principal features of international business is the risk management process, which comprises several risk management plans combined.

It is important to understand the circumstances under which the remainder of the process shall take place. Before the evaluation of risk, the criteria to be used must be established, and how the analysis structure will be carried out must be defined.

The company needs to identify potential risks which may act as a stumbling block and cast a negative impact on the company projects and earnings.

After identifying the possible risks, the company then needs to understand the odds of their occurrences and how much damage they may cost. The main aim of risk analysis is to get an idea about every instance of risk and the influence it may have on the projects and ambitions of the company.

After determining the likelihood of occurrence of the risk along with its consequences, the company should focus on whether they are equipped enough to accept that risk to move forward.

The companies rank the risks according to their severity and look to come up with a strategy to tackle them if the day comes. For this purpose, companies use many risk controls to develop a plan which includes various risk mitigation processes, tactics to prevent risks as well as contingency plans.

The risks, as well as the plans to tackle those risks, must be followed up at regular intervals so that specific actions can be taken in case there are any changes needed to be made. Companies should also always keep an eye on new risks.

The risk management process should be carried out in the presence of the internal as well as external shareholders and they should be consulted before every step.

Approaches to Risk Management

Companies can adopt different strategies for different risks following their identification and implementation of the risk management process. It has a major impact on maintaining the importance of the international business environment.

Eliminating risk is a near-impossible task. As a result, companies tend to take the strategy of minimising risks to the maximum attainable level so that they cannot damage the company reputation and projects.

Often companies come up with a plan to reduce the risks on the processes of the company considerably. This can be attained by making certain adjustments to some aspects of the plan or reducing the scope of occurrence.

In some occasions, the consequences of risk may be shared with the participants of the project, other departments of the business, with a business partner or someone outside the business. As a result of risk sharing, the company does not have to go through a tough time alone.

Sometimes companies take the bold decision of accepting the risks for the better good. They do so if they believe the profits or stakes of the project are higher and could be beneficial for the company and they have the funds to deal with the damages.

Conclusion

The importance of international management depends largely upon the risk management process, which helps in maintaining the significance of the international business environment. It helps to face the unexpected without causing much negative impact on the company. Thus it helps in maintaining the relevance of international business across the world.

Sales Promotion and Publicity is one of the main criteria in a business. A business makes the consumers aware of their goods and services offered by them. They also make the consumers acknowledge the beneficial needs that they can satisfy by using their goods or services.

Without Sales Promotion and Publicity a business will not find potential customers nor they can expand their customer segment. Publicity and Promotion is a hot topic and resourceful study in today’s economic market, hence we detail knowledge on this sector as well. 

Sales Promotion Definition

Sales promotion done by a business means simply persuading the potential customer to avail their products or services. Sales promotion, though a short-term tactic to attract the consumers and boost their sales yet it is a mandatory one. For long-term tactics, a business might use Customer Relation Management as a strategy. 

Sales Promotions are targeted both at the consumers and also at the distributaries or intermediaries like the wholesaler, retailer or agents who help their product to reach the customers. While taking the decision about the Sales promotion campaign, a business need to make sure:

1. What is the cost of the sales promotion that is going to be incurred by the business? This is to be answered as they need to know whether the investment is worth the return from the sales promotion.

2. Second is, the business should take note of this that the business does not merely perform the sales promotion strategy, they also need to check whether the sales promotion strategy is in sync with the brand image or not. They should need to analyze its heavy discounts and premium price rise.   

3. Lastly, they should overview whether the sales promotion will be able to attract the consumers after their campaign is done. 

Publicity

Publicity is the public visibility or the public awareness for any product or service that is offered by the business. It is the flow down of the product related information from the business to the local customers. Publicity includes general public, goods and services, and other important sectors. 

There is a difference between a publicist and a PR. Publicist is someone who does publicity for the business while PR or Public Relations is a strategy that helps an organization to maintain communication with the public. This can be done either internally or with the help of the media. Publicity ranks as an important component in a marketing perspective. The other elements include the promotional mix. Organizations will also design the media coverage to attract the public positively, which is known as publicity stunts.  

Consumer Sales Promotion

The marketing technique that tempts the customers to purchase a product of their business is known as Sales Promotion. These kinds of promotions last for a destined time period which is used to achieve a specific goal or purpose. Unveiling a new product or even increasing their market share the ‘Consumer Sales Promotion’ strategy is used. Various kinds of promotional techniques are used by product manufacturers and sellers. 

One of those is – Providing free samples. This technique is generally used when the business introduces a product in the market. Free samples of the product are given to the consumers to make them taste or test their features. Sampling is also used as a part of a large marketing campaign. 

Offering a Free Trial, in this promotional campaign, consumers are offered a free trial. Based on this trial the consumers decide to continue to avail their products or services or not. This campaign is mostly common in television infomercials where the customer is allowed a 30-day free trial during this time he needs to decide about further buying the product or not.

Free gift, these entice the customers to buy the product in interest of the free gifts gifted to them which are in the package. This also serves as a visual attraction which might draw willingness to buy the product.

Sales Promotion Examples

Sales Promotion is a technique to attract the customers about the sale of their product. 

Few Common Examples of Sales Promotion Are As Follows

1. Flash sales

2. The buy one, get one free offer.

3. Coupons or Discounts

4. Giveaways or Free Samples.

5. Recurring sales.

6. Tripwires

7. Limited time offers.

All these promotional techniques will help the business to grow and get all the customers in their zone. A business is always keen in expanding their territory, and this will happen when they capture a larger market share which means when they are able to persuade a lot of customers to buy their products, they can achieve this goal.

The Promotional Techniques and Sales promotional Ideas thus helps a business to get their customers. Also, vice versa the customers get to know about the goods offered through this sales promotion done.

An Economy is a set of production and consumption activities that help in determining the scarcity of the necessary resources. 

 

These activities, which include production and consumption of goods and services, are required to meet the demands of those who are operating within such an Economy, which can also be referred to as an Economic system.

 

One of the various iterations of Economic systems is the Simple Economics model. 

 

What do you Mean by a Simple Economy?

A simple Economy can be defined as an Economic system in which each and every individual is required to partake in the manufacture of goods and services. These manufactured items are then allocated among the individuals of the Economy.

 

In other words, a Simple Economy is a simplified version of realistic trade which enables us to grasp the fundamentals and thereby make logical predictions about our current Economic behaviour. A well-designed Simple Economic model helps an analyst to take a confusing, real-life situation and pare its features down into a group of essentials. 

 

Before we carry on with our discussion on the Simple Economy meaning, take note of the following section to brush up your knowledge on the fundamentals on Economic systems. 

 

Test Your Knowledge

1. What are the Types of Economy, and how can they be Classified Further?

Ans: The economy of a region, Country or State can be broadly categorised into various types. These can be Industrial Economy, Developed & Undeveloped Economies, free-enterprise Economy, Planned & Unplanned Economy, etc. The Industrial Economy can be further classified as a socialist Economy or a capitalist Economy. 

 

In the case of a socialist Economy, all productions are socialised that are owned by the State, which means, there is no private sector. In contrast, Economic decisions, related to production and the expected rate of profit on such productions, are taken by private entrepreneurs.

• Traditional Economy: In this kind of Economy, the approach is traditional which means that the goods and services are manufactured to match the traditions, customs and beliefs of the community. They essentially focus on agriculture, fishing, etc. This Economy also uses the barter system instead of the modern concept of currency. There can be no market surplus found as they centre around tribal communities and they produce just enough that is required. This approach later evolved into farming where the crop surplus is available in the market. Thus, making it a traditional mixed Economy with the commanding market in the picture. 

• Command Economy: The characteristic feature of a command economy is that it has a centralized power. It is best found in communist countries where the government of the state makes all the laws regulating the Economy of the Country and such government also determines the price and flow of the goods and services. They are also known as the planned Economy and examples of this Economy are Cuba and China. A significant drawback of this kind of Economy is that the government fails to look after all the citizens of the Country. 

• Market Economy: This type of Economy is completely opposite to the command Economy. This is the concept of free-market where the trends of the market are free from the leverage of the government and its controlling discretion. This implies that there are no rules to regulate the Economy or buyers and sellers. This is solely regulated by the laws of demand and supply that are determined by the participants of the market trend. It promises a very high level of growth and makes the private sector powerful in the Country. This also has a higher risk of creating an imbalance of the flow of wealth in the Economy where the rich gets richer and the poor get poorer with the concentration of wealth. There are laws that prevent monopolistic trade practices too, however, this type of Economy is a subjective concept. 

• Mixed Economy: This is a great balance and mix of command Economy and free-market so on a larger scale, the market is free from the control of the government but the government, on the other hand, is free to regulate certain areas of the Economy that require attention and are sensitive by nature such as defence, transportation, etc. It is also known as a dual Economy and two great examples of a mixed Economy are, India and France. This allows private businesses to operate freely while the government protects the public interests. So both the sectors of the Economy can coexist in harmony and balance. It is the right blend of socialism and capitalism. 

 

2. What Does it Mean by Market System and Command System?

Ans: Economic systems can be broadly categorised into two parts, market systems and command systems.

 

In the case of a market system, the Economy of the concerned community is governed by the laws of supply and demand. If a certain product has high demand or its production requires substantial resources and skill levels, individuals have to pay a high price to purchase it. Alternatively, the price of a product will be low if there are a comparatively lower demand and minimum requirement of resources or skill associated with its production.

 

Meanwhile, a command system is a type of Economic system where decisions (regarding production in every sector) are centralised, i.e. the State handles both manufacture and allocation of goods and services. A socialist economy is a prime example of this kind of Economic system.

 

Major Sectors in a Simple Economy

For a Simple Economic model, the existence of two sectors is assumed, these are –

1.  Household Sector

Household sectors refer to the social unit comprising those individuals living together under the same Economic system. In Simpler terms, households are not only the owners of various factors of production but also the consumers of goods and services.

2.  Firm Sector

A firm sector can be referred to as the industrial sector, in which companies, firms and enterprises put an effort in manufacturing products for a profit. In other words, this sector produces all types of goods and services and sell them to the household sector.

Presence of only these two sectors occurs only in case of a closed Economy where there are no government actions or foreign trade involved. 

Before we head to the next and final section of your topic, go through this exercise below to revise the above discussions.

3.  Government sector

This is the sector that only includes the businesses and services owned by the government. It is an agency of the government that is responsible for welfare such as protecting laws and preserving them, defence and other public services. This grants services that are responsible for benefiting society at large instead of one person. These consist of commercial companies that are regulated by the government solely. 

4.  The External sector

For a Country that interacts and trades with International markets, the rest of the world is known as the external sector to the private and public sector of the Country. A few components of the external sector include Foreign Investment, Portfolio investment and Exchange rate. 

 

Test Your Knowledge

1.  A Closed Economy is One Which      

1. Has no Economic relation with rest of the world

2. Has Economic connection with rest of the world

3. Both

4. None of the above

 

       2.   In the Case of a Simple Economy, the Source of Income is From.

1. Industries and services

2. Government of the State

3. Households and firms

4. None of the above

 

Circular Flow of Income in a Simple Economy

In order to construct a circular flow of income for a two-sector or Simple Economy model, several essential assumptions are taken. These are –

• Households and firms are the only two existing sectors in this Economic model. This indicates that there is no government sector or foreign trade involved in such a system.

• Household sectors are the suppliers of factor services to firms only and firms hire services from none other than the household sectors.

• The items produced by the firms, i.e. goods and services, are sold to the household sector in their entirety. 

• From the services provided by the household sectors, an income is earned, which is spent totally on the consumption of goods and services. 

One of the primary features of such an Economic system is that both sectors are not allowed any form of savings. The total income earned by household sectors is used for the consumption of goods and services. In contrast, the profit generated by firms is spent to hire the services of household sectors.

 

Such a Circular Flow of Income can be Explained with the Help of this Illustration 

From the above illustration, it is assumed that the diagonally opposite elements are in one single loop. 

 

So, the 1st loop indicates the flow of factor services from households to firms along with the corresponding flow of goods and services to households from firms. The 2nd loop indicates the flow of factor payments earned by households for their factor services to firms along with the corresponding flow of expenses of consumption from households to firms.

 

At , we hope that our study material on this topic of Simple Economy will be useful for your preparations in the upcoming exams. Make sure to visit our website and download our mobile app to know more about other topics in the Economics curriculum!

Making a team or group is exactly like maintaining a healthy relationship. Just like a relationship, every member of the group has to be patient, give relentless efforts, and also requires support and understanding from the other members of the group. These key factors make the group recognizable as a group. Every member changes from being a collection of strangers to a united group with a common goal.

A group is an assemblage of many people. In simple words, it can be understood as a collection of two or more two individuals coming together to interact with each other; so that they can achieve the same goals and objectives of an organization or a company. This lays the foundation of a company.

 

Introduction

Our discussion so far has focused on the group as an organization, not on individuals within the group. This is similar to describing a car by its type and colour without looking at what is under the lid. External factors are what we see and experience, but internal factors are what make it word. In groups, internal factors are people in a group and how they interact with each other. For teams to function effectively, people in the team must be able to work together to contribute to team outcomes. 

But this does not happen automatically: it progresses as the team works together. You have likely had some experience in being assigned a group to work on a school project or project. When your group starts to meet, you probably look at each other, not knowing how to start. At first, you are not a group; you are just individuals assigned to work together. 

Characteristics of a Group

1)  Size-

A group is formed with at least two members. Usually, the number of group members in a group ranges from 15 to 20 members. It becomes difficult to manage a large group. Therefore it is said that the more members in a group the more complex it is to manage.

2) Goals-

The reason behind the existence of a group is having certain goals to achieve among the group members. A group cannot exist without a goal.

3) Norms-

A group must have certain norms for effective interaction with the group members.

4) Structure- 

Based on the roles as well as the positions held by the members, the group has to have a structure.

5) Roles- 

The group leader assigns a certain role to every group member which they have to achieve in a given time.  

6) Interaction- 

Interacting with the members is very crucial for the group as it increases the bond and motivation to work efficiently. The interaction among the members can occur in various ways. It can be a face to face interaction or a telephonic interaction, in writing form or any other manner.

7) Collective Identity- 

A group is an aggregation of individuals. The individuals are separately called the members and collectively called a group.

 

Types of Groups

There are two types of group as follows:

1) Formal Groups- 

Formal groups are those groups that are formed by the management of an organization or a company to achieve certain goals and objectives. It is further classified as:

a)  Self-directed Teams- 

The group of employees who are authorized to make their own decisions are called self-directing teams. It is independent and also self-governing in nature.

b) Quality Circles- 

Several employees who meet every week for an hour to talk about their problems and are classed together to the same fields come under the category of quantity circles. They also identify the causes of a problem and find out the solution to take necessary steps in this regard.

c)  Committees- 

A committee is formed by the management of an organization for different matters to identify and discuss the issues of the company and arrive at a conclusion. It can be a standing committee, or an advisory committee, or an audit committee, or a grievance committee, or can be an Adhoc committee.

d)  Task Force- 

Taskforce is a temporary committee where the people belonging from different fields are grouped for the performance of the task.

2)  Informal Groups- 

Informal groups are formed by the social and psychological variables operating in the workplace. The creation of such types of groups is very spontaneous due to the common interest, social needs, physical proximity, and mutual understanding among the members. 

 

Five Stages of Group Development

1) Forming Stage- 

The very first stage of group development is the forming stage. This stage presents the time where a group is just formed and the members are starting to come together as a team. In this stage, the members are learning what to do.

2) Storming Stage- 

The storming stage is the second stage of group development. In this stage, the group members have understood the work and therefore the dispute and the competition are at a high level.

3) Norming Stage- 

This is the stage where the group becomes fun and enjoyable because the interaction among the members is easier, productive, and cooperative.

4) Performing Stage- 

At this stage, a sense of belongingness is established because the talents, skills, and experience of each group member are acknowledged. The work becomes more flexible.

5) Adjourning Stage- 

This stage is very crucial in group development. This stage shows that the project has come to an end. 

 

Tuckman’s  Five Stages of Group Development

Psychologist Bruce Tuckman developed his team development model in 1965 to explain how healthy groups come together over time. The Tuckman model identifies five stages in which teams develop: build, whirl, adapt, perform, and reverse. Each of the five stages of team development represents a step towards team building. As team members climb the ladder, they move from a group of strangers into a well-functioning group that can work toward a common goal. Here are five stages of Tuckman team development that are described in detail:

1. Structural phase development team: The stage for making the first phase in the Tuckman team development stages and is the same as your first day at a new job or new school. At this stage, most members of the group are extremely polite and are still very happy about their future. Since team flexibility and team roles have not yet been established, a team leader will often take over the reins of individual members. 

2. Storm development group: The storming stage is like when you reach that point with a new roommate where you start noticing their little idiosyncrasies that reach your nerves. In groups, conflicts often arise as a result of conflicting working styles between team members. Some people may even begin to question the group’s goals discussed at the outset and then stop altogether. This has a negative and depressing effect on those who continue to work hard as the previously established group processes no longer work well. 

3. The general phase of group development: Tuckman’s next phase is the general phase. This is when the team overcomes its previous conflicts and begins to see and appreciate the strength of its team colleagues. At this stage, team members are increasingly respecting those in leadership positions. Now that everyone has started to get acquainted with the team’s processes, team members feel more comfortable as they work to accomplish new tasks.

4. Phase development team play: The playing phase is the most exciting of all stages of development. At this stage, your team’s performance is excellent. This high level of performance means that all team members are self-sufficient and confident enough with their problem-solving skills to be able to work without supervision by leaders. Everyone works like a well-equipped, non-confrontational machine and moves in sync toward the same ultimate goal.

5. Phase development team development: The fifth phase of the Tuckman development sequence is the retreat phase. This last phase was actually not added to the Tuckman model until 1977 and is the most tragic of all stages of team formation. The postponement phase assumes that project teams are only available for a set period of time; once the task of the group is completed, the group itself disintegrates. You can compare this category with separation as group members often find it difficult to separate from people and build close relationships with them. In fact, this stage is sometimes called the “mourning period” because it is common for team members to feel lost when a group is disbanded.

Conflict Management 

As per Webster’s dictionary, conflict is termed as a strong disagreement or friction of interests or opinions. Conflict is part of businesses. Two people can contradict on some point. When conflict occurs employees’ morale lowers and that leads to a decrease in productivity and an increase in absenteeism and mental health issues. Handling and resolving conflicts are complex tasks. An open mind is of utmost importance. Conflict management strategies help organisations to deal with corporate conflicts. There are different types of conflict in an organisation like lack of reporting system, differences regarding work culture and more. In this piece, you will find everything you need to know about conflict management and the types of conflict an organisation faces.

Types of Conflicts in an Organisation

There are three different types of conflict in an organisation. 

Task Conflict

Task conflict involves tangible issues related to workers assignments and can include conflicts regarding resources, differences in ideas and policies, judgement and interpretation of information and more. Collaborative problem-solving sessions can help solve these conflicts, brainstorming possible solutions is important here.

Relationship Conflict 

Relationship conflict has nothing to do with work. This type of conflict generally arises due to differences in personality, interests, and other attributes. In organisations, relationship conflicts are common as people from different backgrounds work together and can have contradictory opinions. 

Process Conflict   

Process conflicts apply to the disagreement over methods or procedure to complete a task. It generally occurs when there is a concrete clash on procedures, policies and strategies.

Effective Conflict Management Strategies  

There are five major types of conflict management styles and knowing how and when to use each style helps organisations control conflict and lead to a healthy working environment for employees. 

Collaborating 

This style is a mix of cooperative and assertive. People who collaborate attempt to work with others to bring a solution that satisfies everyone. Collaborating is best when long term relations are profitable and the outcome is important. In this style, negative effects are minimized as both the parties are satisfied with the solution.

Avoiding 

People who avoid conflict are both uncooperative and unassertive; it is generally side-stepping from an issue. This works best when dealing with the situation is not compulsory for time being or is better to resolve it later.

Accommodating 

Accommodating is to sacrifice your well being for satisfying others. This can be misleading sometimes as people tend to take advantage of the situation. It works best when the relationship is important than the outcome. 

Negotiation 

This aims to find a negotiable and mutually accepted solution that partly satisfies both parties. This style works best where you are losing time and the outcome is not important.  

Distributive Negotiation 

This strategy is employed by the company in the case of limited distribution of assets between both the parties.  

Guidelines for Effective Conflict Management

By following the following guidelines organisations can manage and control conflicts.

Understand the Situation 

Understand and analyze all the details of the conflict. Action taken without understanding the issue can lead to more serious conflicts.

Acknowledging the Issue 

To acknowledge all the underlying issues that create conflicts is of utmost importance. Try to look at the different levels of problems and evaluate them. 

Forbearance 

Never conclude on a conflict in haste. Look for all the information related to the dispute and then take the necessary steps. 

Keep Room for Communications 

Communication is very important for the smooth functioning of an organisation. One can solve a conflict by interacting with the parties.

Solved Examples

Q. Explain How the Establishment of Guidelines Can be an Effective Strategy to Control Conflicts in an Organisation?

Ans: Organising a meeting between the parties is an important aspect of conflict management. But to ensure the proper and quality outcome of the meeting, the organisation must set certain guidelines for the discussion. The guidelines can include avoiding emotional outbursts and more.

In an organization for work to proceed smoothly, it is needed that there is harmony and trust between the workers and the managers. But this is not possible if they do not communicate well and understand what the needs of each other are. It can hence also be said that Scientific Management is an attitude and a philosophy that disregards the traditional hit and miss type of working method.

The methods that are used in Scientific Management include a lot of research and understanding of certain principles to check the need for working in a suitable environment. This topic is hence not only important for students as a part of the syllabus but is also a part of life where they need to use these concepts. So if you are looking for the guide on Taylor’s Principles of Scientific Management – Introduction, Techniques, and FAQ, you can now check it out on where you will get the entire information on the same.

Before we head straight into the techniques of Scientific Management, we should make an effort to find out about the fundamentals of Scientific Management in brief. 

 

What Is Scientific Management?

Typically, Scientific Management can be considered as the art of delegation or as Fredrick Winslow Taylor stated: “Scientific Management means knowing exactly what you want men to do and seeing that they do it in the best and the cheapest way.”

 

Such a concept is mostly concerned with using effective scientific techniques to recruit, select, and train labor. Additionally, the concept is equally responsible for finding suitable solutions to deal with different types of problems concerning a specific industry.

 

Fun Fact: The term ‘Scientific Management’ was coined in 1911 by Fredrick Winslow Taylor. He is acknowledged as the Founder of the Scientific Management Movement and formulated principles for effective work allocation. 

 

Taylor’s Principles of Scientific Management 

The following are F.W Taylor’s fundamental principles of Scientific Management –

1. To replace the ‘Rule of Thumb’ in work with the scientific method to analyze work and determine the best way to perform them efficiently.

2. To delegate work based on workers’ capability and motivation. Additionally, to provide them with the required training to maximize their work efficiency.

3. Allocation of work to both manager and workers, wherein, the managers would be entrusted with planning work schedules and training workers. 

4. Assessment and supervision of workers’ performance. Also, providing them with suitable instructions to maximize their performance.

 

With that, let’s proceed to find out the techniques of Scientific Management by F.W Taylor and while at it let’s also check out related concepts. It will not only help to understand the concept better but will also enable us to gauge their practicality and efficiency in an organizational setup.

 

 In a broad sense, the techniques of Scientific Management are as follows. 

1. Functional foremanship

2. Standardization of work

3. Simplification of work

4. Work-study

5. Differential piece of wage rates

6. Mental Revolution

 

Read along to find all about techniques of Scientific Management by F.W Taylor!

 

What is Functional Foremanship?

Functional foremanship is essentially an administration system that is somewhat based on the principle – ‘Division of Labor’, to establish specialization in an organizational setup. Typically, in a functional organization, the available work is divided into different parts and are delegated to workers who are somewhat specialized in them. 

 

As per techniques of Scientific Management, FW Taylor had suggested that an organization must be divided into sub-departments to enhance the quality and efficiency of both the planning and production department. 

 

In A Broad Sense, An Organization is Divided into Two Sub-Departments with Four Experts in Each Department –

1. Planning department

2. Production department

 

In a Functional Organizational Setup, The Planning Department is Headed by a Planning Manager. Other Workers and their Functions are as Follows –

1. Route Clerk- This person is in charge of deciding a day’s work and is also responsible for ensuring the work sequence is maintained and completed properly.

2. Instruction Clerk- The instruction clerk is accountable for preparing instruction cards containing information about the kind of work, procedures to apply and equipment and raw materials to be used. Subsequently, the data compiled is handed to a gang boss.

3. Time and Cost Clerk- This clerk is mostly responsible for deciding the entire time frame of the designated work. Also, the cost of producing a product is decided by them.

4. Discipline Officer- This officer ensures that delegated tasks are performed in a disciplined manner.

 

Now, Let’s Check out the Components of a Production Department and their Functions –

1. Gang Boss- He/she serves as the leader of a gang of workers. A gang boss is mostly responsible for ensuring that equipment and workers are suitable for producing the required units of products. Also, it is under his supervision to check if raw materials have been made available to workers.

2. Speed Boss- His/her primary task is to make sure that workers are on par with the work schedule. The speed boss is also responsible for identifying the reasons that tend to slow down work productivity and formulating suitable solutions to remedy them.

3. Repair Boss- He/she is responsible for keeping all equipment in good working condition and solves problems about that promptly.

4. Inspector- An inspector checks the quality of goods produced and compares them with the standard quality. Also, an inspector has the power to initiate corrective measures if there is a lag in quality. 

 

Test Your Knowledge: 

Which of these techniques violates the Unity of Command?

1. Fatigue study

2. simplification of work

3. functional foremanship

4. differential piece wage system

 

With that, let’s proceed to find out more about FW Taylor techniques of Scientific Management about standardization and simplification of production. 

 

What is Standardization and Simplification of Work? 

Standardization and simplification of work can be looked at as a means to establish efficiency standards for every activity in an industrial setup. Elements like time, production manner, machinery, raw material, product and its processing can be standardized under this method. For instance, the number of products that need to be produced on a single day or the work that is expected from a worker. 

 

Here’s a Brief Overview of Standardization and Simplification of Work –

1. Standardization of Work

• Standardization of Raw Material- It means that the materials used should be on par with the quality of finished products one intends to manufacture.  For instance, to produce AA+ quality of apparel 5+ quality of textile would be required. 

It can be said that for AA+ quality of garments 5+ quality of raw material, i.e. textile, has been standardized. Subsequently, when an organization would again be required to produce AA + quality materials, they would use 5+ quality materials without any hesitation and in relatively less time.

• Standardization of Equipment- Similarly, standardization of machines would ensure that manual errors are reduced significantly. In turn, it would ensure the completion of work faster and with negligible errors.

• Standardization of Methods Applied- Standardizing the techniques of work would make the production process less cumbersome and relatively quick. Notably, methods devised to complete a particular work are put to use every time similar work is performed.

• Standardization of Working Conditions- Workers tend to perform more efficiently under favorable working conditions. When the working conditions, including safety, ventilation, hygiene, temperature, lighting, etc. are improved or standardized, it enhances productivity significantly. 

 

2. Simplification of Work

The primary objective behind simplification is to eliminate things, methods and practices that make the work complex and cumbersome.  

 

What is the Study of Work?

One of the techniques of Scientific Management – the study of work is mostly concerned with the analysis of organizational activities to produce high products cost-effectively.

Typically, scientific techniques of Taylor about the study of work can further be divided into four types –

1. Method Study- It tends to help producers to pick the most suitable method to finish a particular organizational activity. For instance, this study helps to figure out the most cost-effective way of procuring the required raw materials for production. Also, the objective of this study is to lower the cost of production and to increase customer satisfaction.

2. Motion Study- It is concerned with the analysis of movements of both workers and machines through the course of a production. It helps to analyze if adding or subtracting an activity would make the work faster and better in terms of quality or not. 

3. Time Study – It helps to compute the standard time that would be required to finish a specific activity. In simple words it can be said, the major objective of this study is to estimate –

1. Cost of labor

2. Number of workers required for a task

3. Suitable incentive plan

4. Fatigue study- It helps to find out the acceptable rest intervals that can be given to prevent the onset of mental fatigue among workers. However, the prospect of completing work on time is also the main priority of this study. 

 

Test Your Knowledge: 

Which of these techniques helps to determine the number of laborers that need to be employed and also helps to determine labor cost?

1. Simplification of work 

2. Time study 

3. Differential piece wage system 

4. Functional foremanship

 

Test Your Knowledge: 

Which is the most common cause of fatigue among workers? Choose the correct option:

1. Long working works

2. Unsuitable working conditions 

3. Non-cordial relations between employer and employee 

4. All the above

 

What is the Differential Piece of the Wage System?  

It is one of the techniques of Scientific Management that encourages the application of a piece wage system as a means to motivate employees. As per this system, payment is based on the amount of work done and not the time spent to complete it. 

 

Typically two different wage rates are put to use, namely, high wage rate and low wage rate. Workers who are adept at producing standard units within a given duration are entitled to receive payment as per the high wage rate. On the other hand, workers who fail to produce a specific number of units within the given time are paid as per the lower wage rate. 

 

For instance, the standard output for a day is 25 units, and the wage rates are 4 per unit and 6 per unit, respectively. Now, Sheldon produces 25 units in a day and subsequently earns 150 (25 units x 6).  Contrarily, Missy can produce only 20 units in a day and resultantly would make 80 (20 x 4). Even though there is only a 5 unit difference between Sheldon and Missy’s produce, there is a significant difference between their wages. 

 

As payment is based on efficiency here, workers would be motivated to increase their work efficiency. In turn, it would benefit both an organization and its workers.

 

What is the Mental Revolution?

Mental Revolution is one of the techniques of Scientific Management that demands a change in employers’ and employees’ mindsets. As per this Management technique, a positive mindset is quite crucial for promoting the feeling of cooperation and boosting proficiency. In its absence, conflicts about the division of labor and delegation of responsibility are bound to arise in an organization.

 

Consequently, both employers and their workers should make an effort to increase the overall productivity of their firm through cooperation and by harboring a positive outlook towards business operations.

 

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